Suppose Buyers of Liquor Are Required to Send $1

question 233

Multiple Choice

Suppose buyers of liquor are required to send $1.00 to the government for every bottle of liquor they buy.Further,suppose this tax causes the effective price received by sellers of liquor to fall by $0.60 per bottle.Which of the following statements is correct?

• A) This tax causes the supply curve for liquor to shift upward by $1.00 at each quantity of liquor.
• B) The price paid by buyers is $0.40 per bottle more than it was before the tax.
• C) Sixty percent of the burden of the tax falls on buyers.
• D) All of the above are correct.

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